Randall S. Dearth, GCP’s new President and Chief Executive Officer, said, "I am excited about the opportunity to lead GCP. The Company has great potential given our excellent products and strong customer base. However, our results show that we still have a lot of work to do. Although profitability for Specialty Construction Chemicals continued to improve, volumes in Specialty Building Materials declined primarily in our project-driven product lines. These businesses specialize in large, complex commercial and infrastructure projects. In the second quarter, a reduction in large project activity, particularly in New York and California, negatively impacted SBM's volumes."

Dearth continued, "We are continuing to take significant actions to improve our performance, including appointing new leadership for both SCC and SBM and implementing a new restructuring program with additional expected annualized savings of $30 million to $35 million. This restructuring program brings our total restructuring effort, which comprises non-core market exits, operational improvements and now the optimization of our general and administrative functions, to more than $80 million in expected annualized savings in 2021."

"Along with new leadership, our plan for SBM includes leveraging our existing product portfolio to further penetrate adjacent market segments, addressing additional geographies where we have opportunities to build a stronger presence, and accelerating the introduction of next generation products. For SCC, we expect continued margin expansion due to our focus on core markets, as well as increased penetration of our VERIFI® in-transit concrete management system, which is now fully integrated into our admixtures business. Demonstrating the momentum we have achieved, VERIFI® delivered the best quarter for truck installs in its history in the second quarter."

Gross margin increased 90 basis points to 37.8% primarily due to improved pricing, the favorable impact of exiting unprofitable geographic markets within SCC, as well as improved productivity and restructuring savings, which more than offset unfavorable product mix in SBM.

Income from continuing operations attributable to GCP shareholders was $3.1 million compared to a loss of $29.2 million for the prior-year quarter. The change was primarily attributable to lower interest expense due to debt refinancing and a loss on debt extinguishment incurred during the prior-year quarter, as well as lower selling, general and administrative expenses as a result of our restructuring initiatives.

Net sales decreased 12.5% primarily due to declines in Building Envelope and Specialty Construction Products volumes which was mostly attributable to lower project activity in North America. The decline was partially offset by improved pricing in all regions.

Gross margin of 41.1% declined 240 basis points primarily due to unfavorable product mix and reduced operating leverage as a result of lower volumes.

New Leadership for SCC and SBMThe Company is eliminating the role of Chief Operating Officer and appointing new business leaders for both global SCC and SBM to drive increased accountability and improved performance.

Naren Srinivasan, the Company's Vice President and Chief Strategy, Marketing and Development Officer, will lead our Specialty Building Materials segment. Prior to joining GCP, Mr. Srinivasan led the strategy and corporate development functions at The Hertz Corporation and MeadWestvaco Corporation. Prior to that, he worked in mergers and acquisitions and private equity at Rothschild & Co, Evercore Partners, and Dillon, Read & Co.

Boudewijn Van Lent, PhD will lead our Specialty Construction Chemicals segment. Prior to joining GCP, he served as Chief Executive Officer at Bilfinger Industrial Services Inc., an international industrial services provider. He also held the role of President of North and South America at Rhein Chemie Corporation, a global manufacturer of specialty chemicals, as well as leadership positions at Celerant Consulting, Lanxess Corporation and Bayer.

Additional Restructuring and Repositioning PlanOn July 31, 2019, our Board of Directors approved an additional business restructuring and repositioning plan to further optimize the design and footprint of the Company's global organization, primarily with respect to its general administration and business support functions, and streamline cross-functional activities. The plan represents the next phase of our effort to reduce GCP's complexity and create a more efficient and effective organization and brings our total restructuring effort to more than $80 million in expected annualized savings in 2021.

The Company expects to realize total annualized pre-tax cost savings associated with this plan of approximately $30 million to $35 million, approximately $3 million to $5 million of which the Company expects to realize in 2019, with the entire annualized pre-tax savings of approximately $30 million to $35 million expected to be realized in 2021.

The Company expects to incur total pre-tax costs in connection with this plan of approximately $30 million to $35 million, of which approximately $23 million to $27 million represent restructuring costs and asset impairments, and approximately $7 million to $8 million represent repositioning costs. Additionally, GCP expects to incur approximately $2 million of capital expenditures related to repositioning activities. Substantially all of the restructuring actions under this plan are expected to be completed by December 31, 2020.

The plan approved by our Board of Directors on July 31, 2019 is separate from and in addition to both the 2019 Restructuring and Repositioning Plan ("the 2019 Plan") that was approved by the Board of Directors on February 22, 2019 and the 2018 Restructuring and Repositioning Plan ("the 2018 Plan") that was approved by the Board of Directors on August 1, 2018. The 2019 Plan is focused on GCP's global supply chain strategy, processes and execution. The plan also addresses our service delivery model primarily in North America to streamline our pursuit of combined admixture and VERIFI® opportunities. The Company expects to realize total annualized pre-tax cost savings associated with the 2019 Plan of approximately $22 million to $28 million in 2020. The 2018 Plan is designed to streamline operations and improve profitability primarily within the concrete admixtures product line of our Specialty Construction Chemicals segment by focusing on our core markets, rationalizing non-profitable geographies, reducing our global cost structure, and accelerating the integration of VERIFI® into our global admixtures business. The 2018 Plan is expected to generate approximately $25 million of annualized pre-tax cost savings in 2019.

Interest Expense and Related Financing CostsInterest expense and related financing costs were $5.7 million for the second quarter of 2019 compared to $66.7 million for the prior-year quarter. The decrease was primarily due to a loss on debt extinguishment which occurred during the prior-year quarter and lower interest expense as a result of the debt refinancing transactions discussed below.

Debt Refinancing TransactionsOn April 10, 2018, GCP announced the issuance of $350.0 million aggregate principal amount of 5.5% Senior Notes due 2026, an amendment to the Company's Credit Agreement that, among other things, increased the aggregate principal amount of revolving commitments available to $350.0 million, and the redemption of $525.0 million outstanding aggregate principal amount of its 9.5% Senior Notes due 2023.

Income TaxesIncome tax expense/benefit attributable to continuing operations during the second quarter was an income tax expense of $5.7 million compared to an income tax benefit of $5.3 million for the prior-year quarter. The differences between the provisions for income taxes at the U.S. federal income tax rate of 21.0% and GCP’s overall income tax rate for the three months ended June 30, 2019 and June 30, 2018 were primarily attributable to non-deductible expenses and foreign tax-rate differentials.

Investor CallGCP has scheduled a conference call and webcast at 10:00 a.m. ET on Wednesday, August 7, 2019 to review its second quarter 2019 results and full-year outlook. Those who wish to listen to the conference call webcast should visit the Investors section of the GCP website at www.gcpat.com. The live call can be accessed by dialing (888) 599-8686 in the U.S. or +1 (786) 789-4797 internationally prior to the start of the call. Participants should ask to join the GCP Applied Technologies call. An accompanying slide presentation will also be available on the website.

For those unable to participate in the live conference call, a playback will be available until August 14, 2019. To listen to the playback, please dial (888) 203-1112 in the U.S. or +1 (719) 457-0820 internationally; the access code is 5579783. An audio webcast replay will also be available in the “Events and Presentations” section of the company's website for approximately three months.

Non-GAAP Financial MeasuresIn this press release the Company refers to non-GAAP financial measures including: Net Sales Constant Currency, Net Sales Constant Currency Excluding Market Exits, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EPS, and Adjusted EBIT Return On Invested Capital. These non-GAAP measures do not purport to represent income or liquidity measures as defined under United States generally accepted accounting principles ("GAAP"), and should not be considered as alternatives to such measures as an indicator of GCP's performance. These non-GAAP measures are provided to distinguish the operating results of GCP's current business.

The Analysis of Operations pages included in this press release provide reconciliations of these non-GAAP financial measures to their most comparable GAAP measures, as well as definitions for each of these non-GAAP financial measures and explanations as to why management finds them useful and believes they are useful to investors, potential investors and others.

GCP is a leading global provider of construction products technologies that include additives for cement and concrete, the VERIFI® in-transit concrete management system, high-performance waterproofing products, and specialty systems. GCP products have been used to build some of the world’s most renowned structures. More information is available at www.gcpat.com.

This announcement contains “forward-looking statements,” that is, information related to future, not past, events. Such statements generally include the words “believes,” “plans,” “intends,” “targets,” “will,” “expects,” “estimates”, “suggests,” “anticipates,” “outlook,” “continues,” or similar expressions. Forward-looking statements include, without limitation, statements about expected: financial positions; results of operations; cash flows; financing plans; business strategy; operating plans; strategic alternatives; capital and other expenditures; competitive positions; growth opportunities; benefits from new technology; and cost reduction initiatives. GCP is subject to various risks and uncertainties that could cause its actual results to differ materially from those contained in forward-looking statements, including, without limitation, risks related to: the cyclical and seasonal nature of the industries that GCP serves; foreign operations, especially in emerging regions; changes in currency exchange rates; the cost and availability of raw materials and energy; new product introductions and other growth initiatives; acquisitions and divestitures of assets; GCP’s outstanding indebtedness, including debt covenants and interest rate exposure; GCP’s funded and unfunded pension obligations; warranty and product liability claims; legal proceedings; the inability to establish or maintain certain business relationships, including with customers and suppliers; employee retention; and compliance with environmental laws. These and other factors are identified and described in more detail in GCP's Annual Report on Form 10-K, which has been filed with the U.S. Securities and Exchange Commission and is available online at www.sec.gov. Readers are cautioned not to place undue reliance on GCP’s projections and other forward-looking statements, which speak only as the date thereof. GCP undertakes no obligation to publicly release any revision to its projections and other forward-looking statements contained in this announcement, or to update them to reflect events or circumstances occurring after the date of this announcement.

The Company has set forth in the tables below GCP's key operating statistics with percentage changes for the three months ended June 30, 2019 and 2018. In the table, the Company presents financial information in accordance with U.S. GAAP, as well as certain non-GAAP financial measures, which it describes below in further detail. GCP believes that the non-GAAP financial information supplements its discussions about the performance of its businesses, improves period-to-period comparability and provides insight to the information that management uses to evaluate the performance of its businesses. Management uses non-GAAP measures in financial and operational decision-making processes, for internal reporting, and as part of its forecasting and budgeting processes, since these measures provide additional transparency to GCP's core operations.

In the table, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. These non-GAAP financial measures should not be considered substitutes for financial measures calculated in accordance with U.S. GAAP, and the financial results that the Company calculates and presents in the table in accordance with U.S. GAAP, as well as the corresponding reconciliations from those results, should be carefully evaluated.

Net Sales Constant Currency (a non-GAAP financial measure)- is defined as current period revenue in local currency translated using prior period exchange rates. GCP uses constant currency in assessing trends in sales excluding the impact of fluctuations in foreign currency exchange rates.

Adjusted Free Cash Flow (a non-GAAP financial measure)- is defined as net cash provided by or used in operating activities minus capital expenditures plus: (i) cash paid for restructuring and repositioning, third party and other acquisition-related costs, costs related to legacy product, environmental and other claims, as well as certain other items that are not representative of underlying trends, net of related cash taxes; (ii) capital expenditures related to repositioning; and (iii) accelerated payments under defined benefit pension arrangements. GCP uses Adjusted Free Cash Flow as a liquidity measure to evaluate its ability to generate cash to support its ongoing business operations, to invest in its businesses, to provide a return of capital to shareholders and to determine payments of performance-based compensation.

Adjusted EBIT, Adjusted EBIT Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Adjusted EBIT Return On Invested Capital, Adjusted Gross Profit, Adjusted Gross Margin and Adjusted Free Cash Flow do not purport to represent income measures as defined under U.S. GAAP. These measures are provided to investors and others to improve the period-to-period comparability and peer-to-peer comparability of GCP's financial results and to ensure that investors understand the information GCP uses to evaluate the performance of its businesses.

Adjusted EBIT has material limitations as an operating performance measure because it excludes costs related to income and expenses from restructuring and repositioning activities, which historically has been a material component of net income (loss) from continuing operations attributable to GCP shareholders. Adjusted EBITDA also has material limitations as an operating performance measure because it excludes the impact of depreciation and amortization expense. GCP's business is substantially dependent on the successful deployment of capital, and depreciation and amortization expense is a necessary element of its costs. GCP compensates for the limitations of these measurements by using these indicators together with net income (loss) measured under GAAP to present a complete analysis of its results of operations. Adjusted EBIT and Adjusted EBITDA should be evaluated together with net income (loss) from continuing operations attributable to GCP shareholders measured under GAAP for a complete understanding of GCP's results of operations.

The Company does not provide GAAP earnings on a forward-looking basis because the Company is unable to estimate with reasonable certainty unusual or unanticipated charges, expenses or gains without unreasonable effort. These items are uncertain, depend on various factors, and could be material to the Company’s results computed in accordance with GAAP.

(A) Our segment operating income includes only our share of income of consolidated joint ventures.

(B) Management allocates certain corporate costs to each operating segment to the extent such costs are directly attributable to the segments.

(C) Certain pension costs include only ongoing costs, recognized quarterly, which include service and interest costs, expected returns on plan assets and amortization of prior service costs/credits. SCC and SBM segment operating income and corporate costs do not include any amounts for pension expense. Other pension-related costs, including annual mark-to-market adjustments, gains or losses from curtailments and terminations, as well as other related costs, are excluded from Adjusted EBIT. These amounts are not used by management to evaluate the performance of our businesses and significantly affect the peer-to-peer and period-to-period comparability of our financial results. Mark-to-market adjustments and other related costs are primarily attributable to changes in financial market values and actuarial assumptions and are not directly related to the operation of our businesses.

(D) Other costs represent legal and advisory fees incurred in connection with the nomination by a Company shareholder of Board of Directors candidates to stand for election at the 2019 Annual Meeting of Shareholders, as well as other related matters.

(E) Other current assets consist of income taxes receivable.

(F) Other assets consist of capitalized financing fees.

(G) Other current liabilities consist of income taxes, restructuring, repositioning, accrued interest and liabilities incurred in association with the Darex divestiture.

(H) Other liabilities consist of other postretirement benefits liabilities and liabilities incurred in association with the Darex divestiture.

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